November is now behind us and it turned out to be mostly positive for the XAU gold/silver index. This was expected based on the seasonal/historical overview in last month's article entitled "The XAU in November" (as part of our ongoing XAU seasonal pattern review). For the latest month of November, the XAU started off at its 50-day moving average at around the 105 level and rallied to just below the 120 level.

Now that we're about to enter a new month, what can we expect for the XAU's performance in December based on past history? What follows is an overview of the XAU's seasonal tendencies for the month.

December 1994 was a positive month for the XAU. After ending a 2-month decline at the start of the month and hitting its low for the year at 100, the XAU rallied throughout the month to close that year at the 110 level.

December 1995 was a net sideways month for the XAU, with the index starting the month at about the 120 level and ending at approximately 120. However, the index had sharp but brief rally early in the month.

December 1996 saw basically a sideways trading range emerge but with an upward bias. The XAU started that year's month of December at 115 and ended just below 120 with yet another sharp rally early in the month (as in Dec. '94).

The XAU came off its low for the year in early December of 1997 near the 65 level to rally for a 10-point gain for the month, ending at about 75.

December 1998* saw the XAU start at around 70 and sink to an intra-month low of 60 before ending the month at 64. (*It must be pointed out that 1998 was a deflationary year which saw the 8-year cycle bottom in the fourth quarter.)

December 1999 saw a return to the seasonal pattern of starting the month at a low (around 65) followed by a mild rally through the rest of the month. The XAU ended the month at a high just below the 70 level.

December 2000 saw yet another repeat of the mild rally theme as the XAU started the month at 49 and ending around 52.

December 2001 witnessed a continuation of the year-end mild rally theme as the index began the month at approximate 53 and closed the year at 54, hitting 57 on an intra-month basis.

December 2002 was a solidly good month for the XAU to close out a solidly good year, especially when compared to the broad market (which was in a bear market that year). The index started the month at about 65 and hit 80 toward the end of the month, closing slightly below this level.

December 2003 capped off what had been an extremely bullish year for gold stocks. The XAU finished the year just below its high for the year, at about 110. For the month of December, however, the XAU was basically range-bound and closed the month essentially unchanged.

December 2004 was a down month for the XAU, with the index having peaked in late November at a high of 110. The XAU finished December '04 at just below the 100 level, the first solidly down December since 1998.

What about the Decembers prior to 1994, starting with the year 1984? The month of December saw the index rally in the following years: 1989, 1990, 1992 and 1993. Thus, in the past 20 years of trading history the XAU has been up in December for 11 of those 20 years. Since 1994, the XAU has been up in seven of the past 10 years.

In the years since 1984 when the XAU index has been down for the month of December, in almost every case (viz., '84, '85, '86, '87, '88) the index entered the month below its downward trending 50-day moving average. Only in 2004 was there an exception to this rule.